(MKS LOGO)
FOR IMMEDIATE RELEASE
Contact: Ron Weigner
Vice President and Chief Financial Officer
978.975.2350
MKS INSTRUMENTS REPORTS FOURTH QUARTER 2003 RESULTS
25% SEQUENTIAL REVENUE INCREASE TO $102 MILLION AND RETURN TO PROFITABILITY
Andover, Mass. -- February 3, 2004 -- MKS Instruments, Inc. (NASDAQ: MKSI), a
leading worldwide provider of process control technologies for improving
productivity in semiconductor and other advanced manufacturing processes, today
reported fourth quarter and full year 2003 results. Fourth quarter 2003 revenues
totaled $101.8 million, a 25 percent increase from $81.6 million in the third
quarter of 2003 and a 31 percent increase from $77.6 million in the fourth
quarter of 2002.
On a GAAP basis, net earnings were $2.1 million, or $0.04 per diluted share,
in the fourth quarter of 2003 compared to a net loss of $5.6 million, or $0.11
per basic share, in the third quarter of 2003 and a net loss of $19.2 million,
or $0.37 per basic share, in the fourth quarter of 2002. The prior year fourth
quarter included a special non-cash charge of $13.4 million, or $0.26 per share,
for the reversal of MKS' net deferred tax assets.
On an ongoing operating or non-GAAP basis, which excludes amortization of
acquired intangible assets, the tax charge and other special items, net earnings
were $5.9 million, or $0.11 per diluted share, in the fourth quarter of 2003
compared to a net loss of $1.7 million, or $0.03 per basic share, in the third
quarter of 2003 and a net loss of $3.3 million, or $0.06 per basic share, in the
fourth quarter of 2002.
For the full year of 2003, net sales increased by 7 percent to $337.3 million
from $314.8 million in 2002. The GAAP net loss was reduced to $16.4 million, or
$0.32 per basic share, in 2003 from $39.5 million, or $0.79 per basic share, in
2002.
"We are pleased with our strong revenue growth and return to profitability at
the beginning of what we see as a cyclical upturn. Fourth quarter revenues
increased across our product groups, as an improving economy and higher
utilization at the leading edge
drove semiconductor capital equipment investment," said John R. Bertucci,
Chairman, Chief Executive Officer and President.
"Given the accelerating demand for our broad portfolio of sophisticated
process control and information management solutions, we estimate first quarter
2004 revenues could increase by approximately 20 percent sequentially to a range
of $120 to $125 million, and GAAP net earnings could range from $0.10 to $0.15
per share. On an ongoing operating or non-GAAP basis, first quarter net earnings
could range from $0.20 to $0.25 per share, excluding amortization of acquired
intangible assets and restructuring charges."
The financial results that exclude certain charges and special items are not
in accordance with Accounting Principles Generally Accepted in the United States
of America (GAAP). MKS' management uses these non-GAAP measures internally to
evaluate the company's performance and manage its operations, and believes that
these measures provide useful information for understanding operating results
and comparing prior periods.
Management will host a conference call on February 3, 2004 at 5:00 p.m.
(Eastern Time) to discuss these financial results. Interested parties can access
the live call and a rebroadcast at www.mksinstruments.com. To hear a replay
through February 10, 2004, dial 303-590-3000, passcode 563854#.
MKS Instruments, Inc. is a leading worldwide provider of process control
solutions for advanced manufacturing processes such as semiconductor device
manufacturing; thin-film manufacturing for flat panel displays, data storage
media, architectural glass and electro-optical products; and technology for
medical imaging equipment. Our instruments, components and subsystems
incorporate sophisticated technologies to power, measure, control, and monitor
increasingly complex gas-related semiconductor manufacturing processes, thereby
enhancing our customers' uptime, yield and throughput, and improving their
productivity and return on invested capital.
This release contains projections or other forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995 regarding
MKS' future growth and the future financial performance of MKS. These
projections or statements are only predictions. Actual events or results may
differ materially from those in the
projections or other forward-looking statements set forth herein. Among the
important factors that could cause actual events to differ materially from those
in the projections or other forward-looking statements are the fluctuations in
capital spending in the semiconductor industry, fluctuations in net sales to
MKS' major customers, potential fluctuations in quarterly results, the failure
of MKS and acquired companies to realize the anticipated benefits of their
combined businesses, the challenges and risks involved with integrating the
operations of MKS and acquired companies, dependence on new product development,
rapid technological and market change, acquisition strategy, manufacturing and
sourcing risks, volatility of stock price, international operations, financial
risk management, and future growth subject to risks. Readers are referred to
MKS' filings with the Securities and Exchange Commission, including its most
recent Quarterly Report on Form 10-Q, for a discussion of these and other
important risk factors concerning MKS and its operations. MKS is under no
obligation to, and expressly disclaims any obligation to, update or alter its
forward-looking statements, whether as a result of new information, future
events or otherwise.
###
MKS INSTRUMENTS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended
December 31,
--------------------------
2003 2002
--------- ---------
Net sales $ 101,778 $ 77,558
Cost of sales 64,242 52,523
--------- ---------
Gross profit 37,536 25,035
Research and development 12,931 12,164
Selling, general and administrative 17,523 19,596
Amortization of acquired intangible assets 3,685 3,777
Restructuring, asset impairment and other charges 959 318
--------- ---------
Income (loss) from operations 2,438 (10,820)
Interest income, net 271 235
Other (income) expenses (927) --
--------- ---------
Income (loss) before income taxes 3,636 (10,585)
Provision for income taxes (NOTE 1) 1,500 8,646
--------- ---------
Net income (loss) $ 2,136 $ (19,231)
========= =========
Net income (loss) per share (NOTE 2) $ 0.04 $ (0.37)
========= =========
Weighted average shares outstanding (NOTE 2) 54,006 51,299
THE FOLLOWING SUPPLEMENTAL NON-GAAP EARNINGS INFORMATION IS PRESENTED TO AID
IN UNDERSTANDING MKS' OPERATING RESULTS:
GAAP net income (loss) $ 2,136 $ (19,231)
Adjustments:
Amortization of acquired intangible assets 3,685 3,777
Restructuring, asset impairment and other charges 959 318
Gain from insurance repayment (NOTE 3) (927) --
Tax effect of adjustments -- (1,534)
Special deferred tax charge (NOTE 1) -- 13,378
--------- ---------
Non-GAAP net income (loss) (NOTE 4) $ 5,853 $ (3,292)
========= =========
Non-GAAP net income (loss) per share (NOTE 4) $ 0.11 $ (0.06)
========= =========
Weighted average shares outstanding (NOTE 2) 54,006 51,299
NOTE 1: The provision for income taxes for the quarter ended December 31, 2002
includes a special deferred tax charge of $13,378 to establish a valuation
allowance for the Company's net deferred tax assets. These assets remain
available for use as deductions against future taxable income.
NOTE 2: Due to the net loss for the quarter ended December 31, 2002, net loss
per share is based on the basic number of weighted average shares outstanding.
For the quarter ended December 31, 2003, the Company reported net income and
therefore, used the diluted weighted average shares outstanding.
NOTE 3: The Company recorded a gain of $927 from the early repayment of premiums
related to a split dollar life insurance policy covering the Chairman and CEO of
the Company.
NOTE 4: The Non-GAAP net income (loss) and non-GAAP net income (loss) per share
amounts exclude amortization of acquired intangible assets, acquisition and
disposition related charges and special items, net of applicable income taxes.
MKS INSTRUMENTS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Year Ended
December 31,
--------------------------
2003 2002
--------- ---------
Net sales $ 337,291 $ 314,773
Cost of sales 219,182 208,978
--------- ---------
Gross profit 118,109 105,795
Research and development 47,650 45,999
Selling, general and administrative 69,891 77,830
Amortization of acquired intangible assets 14,692 13,897
Restructuring, asset impairment and other charges 1,593 2,726
Purchase of in-process technology -- 8,390
--------- ---------
Loss from operations (15,717) (43,047)
Interest income, net 1,056 1,450
Income from litigation settlement -- 4,200
Other (income) expenses (927) 4,121
--------- ---------
Loss before income taxes (13,734) (41,518)
Provision (benefit) for income taxes (NOTE 1) 2,651 (1,981)
--------- ---------
Net loss $ (16,385) $ (39,537)
========= =========
Net loss per share (NOTE 2) $ (0.32) $ (0.79)
========= =========
Weighted average shares outstanding (NOTE 2) 51,581 50,000
THE FOLLOWING SUPPLEMENTAL NON-GAAP EARNINGS INFORMATION IS PRESENTED TO AID
IN UNDERSTANDING MKS' OPERATING RESULTS:
GAAP net loss $ (16,385) $ (39,537)
Adjustments:
Amortization of acquired intangible assets 14,692 13,897
Restructuring, asset impairment and other charges 1,593 2,726
Gain from insurance repayment (NOTE 3) (927) --
Charge to reserve note and warrants (NOTE 4) -- 4,121
Income from litigation settlement -- (4,200)
Purchase of in-process technology -- 8,390
Tax effect of adjustments -- (6,147)
Special deferred tax charge (NOTE 1) -- 13,378
--------- ---------
Non-GAAP net loss (NOTE 5) $ (1,027) $ (7,372)
========= =========
Non-GAAP net loss per share (NOTE 5) $ (0.02) $ (0.15)
========= =========
Weighted average shares outstanding (NOTE 2) 51,581 50,000
NOTE 1: In the three months ended December 31, 2002, MKS recorded a full
valuation allowance against its net deferred tax assets. Accordingly, MKS has
not recorded a deferred tax benefit from the net operating loss incurred in the
year ended December 31, 2003. The provision for income taxes of $2,651 in 2003
includes tax expense from foreign operations and state taxes.
NOTE 2: Due to the net loss for the periods, net loss per share is based on the
basic number of weighted average shares outstanding.
NOTE 3: The Company recorded a gain of $927 from the early repayment of premiums
related to a split dollar life insurance policy covering the Chairman and CEO of
the Company.
NOTE 4: During 2001 MKS sold certain non-strategic assets for approximately
$9,000, including a note receivable of $3,928 and warrants valued at $193. In
the third quarter of 2002, MKS recorded a charge of $4,121 to establish a
reserve against the note and warrants.
NOTE 5: The non-GAAP net loss and non-GAAP net loss per share amounts exclude
amortization of acquired intangible assets, acquisition and disposition related
charges and special items, net of applicable income taxes.
MKS INSTRUMENTS, INC.
UNAUDITED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
December 31, December 31,
2003 2002
-------- --------
ASSETS
Cash and short-term investments $129,178 $128,714
Trade accounts receivable 65,454 45,505
Inventories 82,013 73,235
Other current assets 5,631 6,098
-------- --------
Total current assets 282,276 253,552
Property, plant and equipment, net 76,121 82,595
Long-term investments 13,625 15,980
Goodwill 259,924 259,781
Other acquired intangible assets 56,192 67,720
Other assets 4,724 5,995
-------- --------
Total assets $692,862 $685,623
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt $ 20,196 $ 18,472
Accounts payable 25,302 15,301
Other accrued expenses 26,310 27,771
-------- --------
Total current liabilities 71,808 61,544
Long-term debt 8,924 11,726
Other long-term liabilities 3,820 1,663
Stockholders' equity:
Common stock 113 113
Additional paid-in capital 587,910 579,175
Retained earnings 12,238 28,623
Other stockholders' equity 8,049 2,779
-------- --------
Total stockholders' equity 608,310 610,690
-------- --------
Total liabilities and stockholders' equity $692,862 $685,623
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